Long-Term Interest Rates May Not Closely Follow Short-Term Interest Rates

question 31

Multiple Choice

Long-term interest rates may not closely follow short-term interest rates if

• A)People prefer to hold transactions accounts over cash.
• B)The required reserve ratio decreases.
• C)Lenders are reluctant to make loans.
• D)The Fed intervenes in the bond market.

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Definitions:

Aggregate Demand

A schedule or curve that shows the total quantity of goods and services that would be demanded (purchased) at various price levels.

World's Output

The total production of all goods and services across all countries in the world.

World's Population

The total number of people living on Earth at a given time, currently estimated to be over 7.9 billion.

Economic Growth

An increase in the production of goods and services over a specific period, leading to a rise in a country's standard of living.